Farallon doing due diligence on Berau Coal

U.S.-based Farallon Capital Management is carrying out a due diligence on PT Berau Coal which operates a coal mine in Berau regency, East Kalimantan as part of the agreement to convert debt by the coal firm to the U.S. firm into equity, according to industry sources.

The sources said Farallon was seeking to convert the loan owed by PT Armadian Tritunggal, which owns 90 percent stake in Berau, which sold 9.5 million tons of coal last year.

Jeffry Mulyono, chairman of Berau, admitted that there was a debt-to-equity conversion agreement between Armadian and Farallon, but refused to comment on the due diligence process.

According to sources, negotiations between Farallon and Armadian had been progressing in months. Lately, Armadian considered canceling its plan to convert its debt to Farallon into equity as the increasing trend in coal prices has given hopes for the coal miner to repay its debt to the U.S. firm.

Farallon, which has bought several assets in Indonesia following the economic crisis, including Bank Central Asia, looks to have increasing interest in the country?s mining sector, particularly the coal sector. It is reportedly among members of the consortium that has agreed to buy coal miners Arutmin and Kaltim Prima Coal from Bumi Resources. (Godang)